Australian Venue Co. eyes off ASX listing

Australian Venue Co's (AVC) potential ASX listing is getting closer, with Citi and Goldman Sachs acting as advisors on the float.

Floating on the Australian stock market is expected to position the Bob East-chaired company as a growth play, similar to the way he positioned Mantra Group before selling it to Accor.

Analysts at Goldman Sachs have valued the business at $975 million to $1.315 billion, based on FY22 earnings forecasts of $207 million and suggested AVC operated 175 venues across Australia and New Zealand.

As a major aggregator of leasehold sites since 2014, AVC, which is majority owned by private equity firm KKK, has been able to focus on leasehold venues and expand its business in a capital light fashion. At the same time it is able to benefit from the reopening of the pub sector.

AVC was performing well before COVID-19, adding approximately 15 venues each year to its portfolio. It made a bulk purchase of 86 venues from Coles in 2019, which put it behind only the Woolworths Hotels operation.

It is expected to resume its run now that COVID restrictions have lifted.

KKK is expected to roadshow the business to institutional investors to drum up interest in its potential IPO.

Revenue expectations for 2021 financial year were $624 million. $400.8 million of that was from the sale of food and drinks and the balance from gaming.

Net profit after tax is expected to be $50.5 million this year and $60.2 million according to Goldman Sachs.

Goldman Sachs expects AVC's growth to be supported by "a solid industry organic growth outlook, with industry revenue rising at about 3 per cent a year".

Should a vaccine be rolled out quickly, both Citi and Goldman Sachs sees potential upside for investors if the company fulfils its listing.

27th April 2021